Low-Carbon Oil and Natural Gas: Pipedream or possibility?

There’s a global off-fossil agenda that’s gained traction in recent years because some think the only way to combat climate change is to quit hydrocarbon use. It’s a vision, unfortunately, that doesn’t take into account the energy needs of a growing world, and the numerous economic, social and health benefits that energy security and abundance provides.

“The growing world will require energy in all forms. Renewables and new alternative sources will increasingly supply a part of that energy mix. But the world is also going to need oil and natural gas for a very long time,” says Tim McMillan, president and CEO of the Canadian Association of Petroleum Producers (CAPP).

So how can we meet the world’s energy needs while responding to the climate change challenge through reduced GHG emissions? The solution is one that Canada’s oil and natural gas industry is already working on: lower-carbon oil and natural gas.

Quick Facts

Growing world requires more energy in all forms

The International Energy Agency forecasts a 30 per cent increase in global energy demand by 2040.

In its latest annual outlook, the International Energy Agency (IEA) forecasts global energy demand to increase 30 per cent by 2040. To meet that demand, oil and natural gas consumption will remain robust over the next two decades, rising by 10 and 45 per cent respectively. Renewable energy sources including wind and solar will increase by 400 per cent. Even so, they will only meet six per cent of the world’s energy needs by 2040. By then, we can expect global consumers to still consume as much as 105 million barrels of oil a day— compared to just over 97 million barrels a day now.

Getting Carbon Out of the Barrel

“Our industry developed the technology to get the oil out of the sand. The challenge now is to develop bold, new ways to take the carbon out of the barrel,” McMillan says.

Today, innovators in Canada’s industry are working harder than ever to develop new methods to produce a barrel of oil with fewer greenhouse gas (GHG) emissions.

Take Kostis Katsimihas, for example. He’s a development lead at Suncor who’s helping to oversee the development of direct contact steam generation (DCSG), an evolving technology that could set the standard for future in situ oil sands recovery.

DCSG is a brand new process that does away with traditional steam boilers, the norm in steam-assisted gravity drainage (SAGD) operations. Instead, using a specialized burner, configured much the way a rocket engine is, wastewater is put in direct contact with the products of oxygen-fuel combustion. The result of the combustion (called flue gas) becomes a mixture of steam and carbon dioxide (CO2) that can be injected underground to recover bitumen.

“There's a simplicity of design. You basically mix fuel gas and oxygen and boil water, creating flue gas for bitumen recovery,” says Katsimihas, Suncor’s development lead for the DCSG pilot projects.

Kostis Katsimihas, development lead at Suncor, is working on direct contact steam generation, an evolving technology that could reduce GHG emissions and set the standard for in situ oil sands extraction. Photo by Tung Bui

The outlook for DCSG is very promising. Direct combustion is more energy-efficient compared with traditional boilers used in SAGD, and doesn’t require water treatment, in turn creating energy and cost savings. Plus, DCSG offers innovative ways to cut down GHG emissions beyond increased energy efficiency.

“With direct combustion, the CO2 is contained within the steam, so the flue gas doesn’t go up the stack like in traditional SAGD boilers. We can get more complete control over CO2, either potentially leaving the CO2 downhole for sequestration, or using it to mobilize bitumen and enhance oil recovery,” Katsimihas says.

"The industry has always realized this effort is important, but it’s even more important now. We all want to be able to carry out the oil and gas business better.”

Kostis Katsimihas

Right now Suncor is advancing the project’s research phase to the next step. At Suncor’s MacKay River in situ facility near Fort McMurray, they’re finishing up a year-long pilot project, where CO2 has been co-injected with steam into a well pair to study reservoir performance and sequestration potential. Suncor is also partnering with CanmetENERGY, the federal research organization, to build a lab pilot near Ottawa. A year and half of testing is planned to optimize burner design and support a future field demonstration at Suncor’s operations, scheduled to begin in 2020.

COSIA: An oil sands collaboration

One of the top champions of developing technologies to solve the industry’s pressing environmental issues is Dan Wicklum, chief executive of Canada’s Oil Sands Innovation Alliance (COSIA).

Dan Wicklum, chief executive of Canada's Oil Sands Innovation Alliance, is excited by the new technologies being developed to lower GHG emissions in the oil sands. Photo by Jason Dziver.

“When I look at what’s in the technology pipeline right now, with new technologies that could potentially slash the GHGs that are emitted to the atmosphere as the industry produces oil sands, that’s really exciting,” Wicklum says.

Since its inception six years ago, COSIA, a collaboration of the country’s oil sands producers, has focused on accelerating the pace of environmental improvements in the industry. A top priority is cutting GHG emissions, along with reducing tailings and lowering impacts on water and land. To date, COSIA member companies have shared 981 technologies and innovations that cost more than $1.4 billion to develop.

One of COSIA’s recent efforts involves reaching out to innovators around the world to quickly bring energy-efficiency solutions to the sector.

In November, COSIA announced the first winner in a waste-heat innovation challenge it sponsored in partnership with the Foresight Cleantech Accelerator Centre in Surrey, B.C. The winner was AMSEnergy, a small U.S. company, which has refined a heat pipe heat exchanger technology, originally developed by NASA. The technology enables the transportation of large amounts of heat with very small temperature differential. With funding from COSIA, the company now plans to adapt the technology to capture and re-use waste heat to improve boiler efficiencies in SAGD operations. The results of this work could cut GHG emissions from operations by as much as 10 percent, and will reduce costs because less energy will be required.

“When I look at what’s in the technology pipeline right now, with new technologies that could potentially slash the GHGs that are emitted to the atmosphere as the industry produces oil sands, that’s really exciting.”

Dan Wicklum

According to Wicklum, the oil sands is in the middle of a revolution aimed at drastically cutting CO2 emissions, as it looks for ways to increase energy efficiency by reducing the need for steam during bitumen extraction. It’s an area of activity, he predicts, where industry could reduce GHG intensity by between 10 to 30 percent in the next five years and achieve even greater gains in the next decade and half.

“Good sectors don’t get complacent, they continually reinvent themselves. And that’s what the oil sands is doing, by rethinking how production is carried out,” Wicklum says.

Did You Know?

Solvents could help solve GHG emissions

Industry is looking into solvents as a potential breakthrough for reducing carbon emissions associated with oil sands extraction.

One way industry is looking to reduce GHG emissions is by reducing or eliminating the need for energy-intensive steam production during the extraction of bitumen from underground.

At its Foster Creek facility at Cold Lake, Alberta, Cenovus Energy is testing an oil sands extraction technology using a solvent-aided process. It involves adding natural gas liquids (NGLs), a by-product of natural gas production, to the steam that’s injected into the reservoir during the steam-assisted gravity drainage (SAGD) process. The NGLs act as a solvent, thinning the oil for easier recovery. The new process, which will use a higher percentage of solvent than previous pilots, could potentially significantly lower the cumulative steam-to-oil ratio and water treatment costs associated with steam generation.

At Suncor’s Dover site near Fort McMurray, a consortium of Suncor, Devon Canada, Nexen Energy ULC and Harris Corporation, with funding from Emissions Reduction Alberta, is piloting the use of electromagnetically assisted solvent extraction. The Enhanced Solvent Extraction Incorporating Electromagnetic Heating (ESEIEH) technology works much like a microwave, creating electromagnetic heating to warm the reservoir before adding a light hydrocarbon such as butane or propane to mobilize bitumen for production. If successful, this process could potentially reduce energy usage and GHG emissions by 50 to 75 percent.

More Innovations

Petroleum Technology Alliance Canada (PTAC) is an industry non-profit that supports technology development across the entire oil and natural gas industry. Through PTAC, entrepreneurial clean-tech start-ups are developing innovative ways to make oil and gas operations more efficient and less carbon-intensive. One example is called SlipStream. This patented technology captures vented methane hydrocarbons from storage tanks, pneumatic instruments and other sources and uses them as a supplementary fuel source, reducing engine fuel consumption. According to PTAC, this innovation and similar fuel-saving applications are saving the industry millions in operating dollars while preventing the release of hundreds of thousands of tonnes of GHG emissions annually.

Soheil Asgarpour, president of Petroleum Technology Alliance Canada (PTAC), works with industry to find ways to reduce both cost and environmental footprint through innovation. Photo by Jason Dziver.

“The industry is showing it can find more ways to reduce cost and its environmental footprint, both at the same time,” says Soheil Asgarpour, PTAC’s president.

Many of these improvements are occurring as companies retrofit operations with cleaner, better equipment. And in the hope of achieving even bigger gains, industry is also investing in transformative technologies like fuel cells or carbon capture and storage (CCS).

Fuel cells transform chemical energy from fuel into emissions-free electricity. They also offer another method to remove CO2 from natural gas-fired processing facilities. That’s what a group of COSIA members, including Canadian Natural Resources Limited (Canadian Natural), is working on through a joint industry project. Together with Alberta Innovates, a government agency that promotes research and development, they’re developing a project to pilot the use of a 1.4 megawatt molten carbonate fuel cell power plant to capture CO2 from an oil sands facility. The captured emissions could be stored or used for enhanced oil recovery.

Canadian Natural is also a leader in carbon capture and sequestration/storage (CCS). The company estimates that its current CCS projects will capture 1.6 million tonnes a year of CO2 by 2018, making it one of the largest industry owners of CCS capacity in the world.

At Canadian Natural’s Horizon oil sands mine, a new recovery plant is capturing CO2 from a hydrogen plant and injecting it into tailings. In addition, as a result of a multi-billion dollar deal with Royal Dutch Shell earlier this year, Canadian Natural’s CCS projects now include the Quest facility as part of the Athabasca Oil Sands Project. Here, advanced technology uses a product called Amine that absorbs the CO2 from the process stream at an upgrader’s hydrogen manufacturing plants. The CO2 is separated from the Amine and pressurized to turn the CO2 gas into a liquid that is piped and injected underground for safe and permanent storage into deep geological formations.

“The industry is showing it can find more ways to reduce cost and its environmental footprint, both at the same time.”

Soheil Asgarpour

The company is also a partner in the construction of the North West Redwater Sturgeon Refinery, which will capture CO2 during processing. Canadian Natural estimates that its current CCS projects will have capture capacity of 2.7 million tonnes a year of CO2 by 2018 when the Sturgeon Refinery is on-stream, making it one of the largest industry owners of CCS capacity in the world.

“We’re looking at a variety of ways to de-link carbon from the production process. CCS is one of the key pathways we can use to responsibly manage GHG emissions,” says Joy Romero, vice president of technology & innovation at Canadian Natural.

CRIN: Cross-industry collaboration

As the country’s oil and natural gas industry looks to re-invent itself, there’s a sense of urgency. Industry leaders are focused on ensuring that change in the sector keeps pace with a world transitioning to clean energy. To accelerate improvement, they’re creating new forums for collaboration.

Joy Romero, vice-president of technology and innovation at Canadian Natural, chairs the Clean Resource Innovation Network (CRIN) which seeks to position Canada as a global leader of low emissions hydrocarbon energy. Photo by Jason Dziver.

Earlier this year, industry representatives launched the Clean Resource Innovation Network (CRIN). Their aim is to create a national, industry-wide and multi-sector network to position Canada as a global leader of low emissions hydrocarbon energy, from extraction to end use. CRIN plans to unite groups such as COSIA and PTAC under its collaborative umbrella, along with conventional and unconventional oil and gas companies, universities, government agencies, venture capital firms, entrepreneurs and others that support innovation.

“There are many groups who are trying to make a difference in this space. We believe we can be more efficient and advance our goals much faster if we’re all working closely together,” says Romero, one of the founders and CRIN’s chair.

So far, the network has attracted nearly 70 members from organizations across the country. In addition to COSIA, PTAC, CAPP and upstream producers, the roster includes Alberta Innovates, the National Research Council of Canada, the Business Development Bank of Canada, Evok Innovations as well as eight universities. It’s established a steering committee, and has a CRIN senior leaders forum to meet several times a year. Looking at different technology roadmaps, the group has identified a number of core opportunities, including improved bitumen recovery and decarbonizing the resource.

For Romero, what’s at stake through CRIN and the industry’s overall drive to produce cleaner hydrocarbons is nothing less than the future of the country’s oil and gas sector.

"We believe we can be more efficient and advance our goals much faster if we’re all working closely together."

Joy Romero

“Our oil is Canada’s oil. It’s very important we continue to develop it in a responsible way to the benefit of Canadians. We want to be able to continue to realize this benefit in a cost-competitive, carbon-competitive way,” Romero says.

Underlying her words is a quiet confidence that lower carbon oil and natural gas is not only possible, it’s inevitable as the industry invests further in clean technology. It’s a commitment that’s shared by many others in the industry, especially those like Katsimihas, who are working on the front lines with the support of Alberta Innovates and Natural Resources Canada to bring new innovations into existence.

“There’s a lot of work going on. The industry has always realized this effort is important, but it’s even more important now. We all want to be able to carry out the oil and gas business better,” he says.

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About Context: Energy Examined magazine

This magazine website is published by the Canadian Association of Petroleum Producers as part of an ongoing dialogue with Canadians. Context: Energy Examined aims to provide an engaging insider’s perspective for the public. Articles range from features on key and timely industry issues, profiles of people working in Canada’s oil and gas sector and educational content designed to build industry knowledge. Content is edited by CAPP Communications; questions on editorial content may be referred to context@capp.ca.